Hoteliers, apartment owners and other building operators on Tuesday refiled a lawsuit targeting carbon initiatives issued by the state of Colorado and the city of Denver, calling them unworkable and unfairly expensive.

Both sets of regulations have required sweeping reductions in energy use and greenhouse gas emissions by larger commercial buildings.

The Energize Denver ordinance adopted in 2021 and enforced by Denver’s Office of Climate Action, Sustainability and Resiliency (CASR) requires buildings sized 25,000 square feet or larger to slash emissions 30% by 2032 and by 80% by 2040.

Penalties for non-compliance by owners would begin much sooner as a timeline plays out, requiring buildings to undergo performance modeling, benchmarking and other processes.

Meanwhile, a bill passed by the legislature in 2021, issued as Regulation 28 by Colorado’s Air Quality Control Commission in 2023, mandated 7% reductions in buildings of 50,000 feet and larger by 2026, and 20% by 2030.

Groups representing a consortium of building operators had filed a lawsuit against both initiatives in 2024, but this past April a federal judge dismissed the action. 

The judge’s dismissal had been “without prejudice” — meaning that plaintiffs may refile the suit if they could provide concrete evidence that city and state measures violate federal law.

“When the judge ruled on the motion to dismiss, she ruled not on the substance of the suit but on the standing,” said Kathie Barstnar, executive director of NAIOP Colorado, representing commercial building owners and developers.

NAIOP and the other two plaintiff groups contended that the U.S. Department of Energy specifies the standards for major building systems, such as heating and air conditioning equipment, and that state and local laws are precluded from requiring those systems to be replaced.

City and state regulators denied that the regs necessitate replacing of gas furnaces and other existing building equipment with other systems. Barstnar said the refiling will include evidence that for many buildings, the measures effectively require replacement.

“In the lapsed year, our members have done some of the studies that would be necessary for compliance, and we have much more data now that the regs would require replacing equipment,” she said. 

The filing will include eleven declarations on studies completed to the standards of the American Society of Heating, Refrigerating and Air Conditioning Engineers on a range of commercial buildings, newer and older. Some are larger corporate apartments and hotels, but some are smaller operations owned by individuals, rather than by large corporations.

To comply, Barstnar said, even small operators might be faced with additional hundreds of thousands of dollars in refits of HVAC and other energy systems.

“Most of them have already done the easy stuff like the lights and rheostats, and now for most it will be major changes that have to happen,” she said. 

Also included are studies performed on four landmark Denver hotels: Hotel Teatro, the Sheraton Denver and the Curtis Denver, each in downtown, and Hotel Clio in Cherry Creek North.

With the lawsuit back in court, the city has already announced some lessening of the mandates’ impacts.

Emily Gedeon, director of communications and engagement for the Office of Climate Action, Sustainability and Resiliency, noted that long term goals for Energize Denver have not changed, and that the program aims to eliminate all greenhouse gas emissions by 2040.

When the Energize Denver ordinance passed, she noted, estimates were that the performance policy and newer building codes would yield an 80% reduction from buildings. Both CASR and the Colorado Air Quality Commission told The Denver Gazette they were unable to comment on the pending litigation.

Regulators and proponents of the climate measures have described the reductions as near term expenses that will result in better long-term outcomes both for building owners, as well as for apartment dwellers. The plaintiffs in the complaint said they see no such advantages.

Barstnar and other building industry representatives said the individual cases strongly point to evidence that buildings powered by natural gas will necessarily be required to convert to electric systems to avoid penalties. In carbon-reduction strategies, electric systems count for fewer emissions, provided that the energy replacement is solar, wind or some other renewable electric source.

The plaintiffs cited a 2025 study by the Common Sense Institute that estimates future electricity prices could grow at more than three times the rate of inflation and vastly exceed the historical growth rate of electric costs.

Moreover, apartment dwellers themselves will pay more for electric heat, according to Andrew Hamrick, senior vice president and general counsel to the Apartment Association of Metro Denver, among the plaintiffs.

“The reason people use natural gas, which is harder to get to a residence, is that it will save a great deal of money over time,” Hamrick told The Denver Gazette.

Hamrick said that both the city and state drastically underestimate costs that will be passed on both to apartment owners and their dwellers.

“The only source of revenue to rental housing providers is rent, so every cost is passed on directly to renters,” he added.

Facing headwinds from industry opponents, CASR has set back some deadlines for compliance and said that owners can apply for additional extensions in the face of financial inabilities. Some financial penalties have been reduced; and programs have been offered to help train staff or to rebate costs of energy audits.

But the apartment association’s Hamrick dismissed those as largely irrelevant to the impacts: “This is the worst form of government, when you pass a law that’s so strict that nobody can comply with it, and then a bureaucrat decides whether you’re doing enough.”

He added he believes that state estimates of the compliance costs are off by exponential amounts.

NAIOP’s Barstnar called the initial concessions in the Denver regulations “just kicking the can down the road.” She and other plaintiffs added that their refiling takes those and other recent revisions to the measures into account.

“Even the city and state have recognized their programs wouldn’t work, and they went back and tweaked them,” she said. “We think they still won’t work, and we see the same challenges exist. People will be required to replace perfectly good equipment because it won’t match the performance standards.”

“It seems to me changes made to (the city and state initiatives) are extend-and-pretend. They’re not going to undo the damage. They will just make it harder to comply,” Barstnar added.

Plaintiffs expressed confidence that the new case will address the issues that had led to its dismissal earlier.

“I’m cautiously optimistic,” Barstnar added. “It will be hard not to see that this is preempted by federal law.”

The decision and its potential impact on property owners comes at a critical juncture for Denver’s economy, Barstnar noted.

“Downtown is still struggling, and that’s before you lay on the cost of compliance,” she said. 

The revised complaint includes a filing for a motion to amend, followed by the amended complaint. The filings require confirmation by the plaintiffs that both the city and state agencies have been notified of the refiling.

Sources close to the action said that plaintiffs have already received that notice and that both agencies will oppose the new complaint.